The Fairfax report prompted a critical response from the South Australian Chamber of Mines and Energy (SACOME), which said the move would be another factor in deterring investment in Australia’s mining sector.

“We are deeply disturbed by reports the federal government and Greens are planning to alter the agreement that allows for royalty increases to be offset against a company’s MMRT obligations, by limiting the amount of refunds they can claim,” SACOME chief executive Jason Kuchel said.

Kuchel went on to say that despite the government signing a deal with the industry, it was now looking to move the goalposts as it got “increasingly desperate for revenue.”

It’s understood the MRRT, which came into effect on July 1 and taxes the profits of coal and iron ore companies operating in Australia, has not yet raised significant revenue for the government.

According to the Australian Financial Review, Treasurer Wayne Swan was considering whether to introduce legislation to cap state royalties or penalise the states for increasing royalties by withholding grants.

Swan is reportedly due to meet state counterparts in early December in a bid to deal with increases in state royalties.

Kuchel said any changes to put an extra impost of the coal and iron ore industries came at the worst possible time, with the sector reeling from rising costs, lower commodity prices, job cuts and general investor jitters.

“Adding another cost burden reinforces the message that Australia is an expensive and unpredictable place to invest, and harms our reputation internationally,” he said.

Kuchel said the MRRT was working just as it was intended, by capturing a share of resource industry profits in the good times and not raising much when times were tougher and profits smaller.

Queensland Treasurer Tim Nicholls also slammed the proposed royalty changes, saying Swan was looking for an escape route.

“He designed a tax that failed to deliver any revenue to the Commonwealth and now he’s looking for ways to make the states foot the bill,” Nicholls said.

Nicholls urged Swan to come clean with the people of Queensland.

“Does he intend to penalise them for his mistakes?”

Nicholls said states needed certainty now more than ever and appealed to Swan to rule out bending to Greens’ demands for MRRT amendments.

Gindalbie Metals managing director Tim Netscher said the reports on the proposed MRRT royalty changes were concerning.

“It would be hugely destructive to WA and Australia if the federal government was to claw back any royalty concessions put in place by the state government,” he said.

“Given the state of the world economy and the challenges associated with developing new resource projects, particularly those involving downstream processing, all governments need to be looking at ways to reduce the costs.

“That is ultimately the most effective way for them to increase the amount of tax revenue available."